India’s exports to countries around the Strait of Hormuz have come under pressure as the renewed Iran-US conflict disrupts trade flows through the region. 

Nearly $5 billion of India’s exports to seven Hormuz-linked economies declined in the June quarter, with around $3.1 billion of those goods also seeing weaker exports to other global markets. This could make it harder for Indian exporters to find alternative buyers if the disruption continues.

India’s exports to Bahrain, Kuwait, Iran, Iraq, Qatar, Saudi Arabia and the UAE fell 16.9% year-on-year to $11.4 billion in the April-June quarter of FY27, compared with $13.7 billion a year earlier. The decline came even as India’s overall merchandise exports increased to around $129.5 billion from $111.5 billion during the same period.

The data shows that the impact is not limited to a few products. Of 815 commodity categories with exports of more than $1 million, 466 recorded a year-on-year decline in the first quarter. Their combined export value fell to around $5 billion from $8.3 billion, marking a decline of roughly 40%.

Some sectors are particularly exposed. India’s diamond exports to the seven markets declined by about $115 million, while total diamond exports fell by around $140 million. The region accounted for 18.1% of India’s diamond exports in the previous year. Gold jewellery exports to the seven countries declined by around $224 million, although some of the lost demand was offset by other markets.

Rice exports have also taken a significant hit. Parboiled rice shipments to the seven countries fell by about $335 million. Exports of parboiled basmati rice to the region dropped 55% to $270.6 million from $605.9 million a year earlier.

However, not all exporters are facing the same problem. Some companies have been able to redirect shipments to other markets. Aluminium wire exports to the Hormuz region plunged 95.5%, but India’s overall exports of the product rose 41.7%. Motor gasoline and aviation turbine fuel showed a similar trend, with weaker regional exports but stronger global shipments.

The key concern is the $3.1 billion basket where exports are falling both in the Hormuz region and globally. These products could face a more serious demand problem because simply redirecting shipments may not be enough. 

With tensions again affecting shipping routes and global trade, Indian exporters may face higher logistics costs and longer delivery routes as they look for alternative markets.

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